Last Update 09 Jan 26

Fair value Decreased 0.34%

NEE: Duane Arnold Nuclear Restart And AI Power Demand Will Support Upside

Analysts now see slightly lower upside for NextEra Energy, trimming the average price target by about $0.30 as they weigh recent target resets along with updated assumptions around profit margins and future P/E levels.

Analyst Commentary

Recent research on NextEra Energy points to a mixed but generally constructive view, with several price target increases balanced by one modest trim and some caution on how much future growth is already reflected in the share price.

Bullish Takeaways

Bullish analysts are lifting price targets into the mid to high US$80s and US$90s. This signals confidence that the current valuation can be supported if the company continues to execute on its plan.
One bullish view highlights a long runway for 8% growth to extend well beyond 2030. If achieved, this could justify higher long term P/E assumptions compared with more traditional utilities.
The Duane Arnold nuclear plant restart, backed by a 25 year power purchase agreement with a large technology customer, is described as constructive. It has an estimated direct value accretion of about US$1 per share, or roughly 1%, adding incremental support to the equity story.
Another upbeat stance points to NextEra as a beneficiary of rising demand for baseload, zero carbon power from data center and hyperscale customers, which could support growth in its asset base over time.

Bearish Takeaways

Bearish analysts point out that utilities underperformed the S&P in October, and the small downward adjustment of about US$1 in one price target reflects some restraint on how much upside they see from here.
One cautious view argues that NextEra's growth outlook now looks priced in after the stock's recent rally, which could limit re rating potential unless earnings or capital deployment exceed current expectations.
Some research characterizes the path to sustained 8% growth as involving above average risk for only modestly better growth relative to peers, suggesting that investors are being asked to accept higher execution risk without a clear premium.
Neutral stances with price targets in the US$80s signal that, while the story is attractive, valuation already assumes steady delivery on current guidance and does not leave much room for missteps on projects or regulatory outcomes.

What's in the News

Google and NextEra plan to restart Iowa's Duane Arnold Energy Center, with the 615 MW nuclear plant targeted to return to service by the first quarter of 2029 to supply 24/7 carbon free power for Google's AI and cloud operations under a 25 year agreement, and Central Iowa Power Cooperative set to purchase the remaining output on the same terms (Fox Business and company announcement).
NextEra has agreed to acquire the combined 30% interest in Duane Arnold held by Central Iowa Power Cooperative and Corn Belt Power Cooperative, which would bring its ownership of the plant to 100%, subject to regulatory approvals for the restart (company announcement).
NextEra and Google Cloud are expanding their energy and technology collaboration, including plans to co develop multiple gigawatt scale data center campuses in the U.S. with associated generation and capacity, and to use Google Cloud AI across NextEra's operations and grid planning, with a first commercial product expected in the Google Cloud Marketplace by mid 2026 (company announcement).
NextEra filed for a US$4b follow on at the market equity offering of its common stock, adding another potential funding source for future projects (company filing).
The company has completed the repurchase of 26,901,008 shares, described as 1.59% of shares, for US$375m under the buyback program first announced on February 28, 2005, with no shares repurchased in the July 1 to September 30, 2025 period (company filing).

Valuation Changes

Fair Value: The model fair value estimate is now US$90.83, a small reduction from US$91.14.
Discount Rate: The discount rate assumption is essentially unchanged at 6.96%, compared with 6.96% previously.
Revenue Growth: The long term revenue growth assumption is now 11.69%, compared with 11.69% before, reflecting only a very small adjustment.
Net Profit Margin: The profit margin assumption has risen slightly to 27.13%, from 26.80%.
Future P/E: The future P/E multiple assumption has eased to 24.16x, from 24.54x.

Surging demand for electricity and advantages in renewables position NextEra for strong revenue growth and margin expansion over competitors.
Legislative support, project backlog, and regulated utility investments ensure stability, predictable earnings, and sustainable long-term growth.
Phasedown of incentives, rising financing costs, regulatory hurdles, modest utility earnings growth, and decentralized competition threaten NextEra's long-term revenue, margin, and market position.

Catalysts

About NextEra Energy

Through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America.What are the underlying business or industry changes driving this perspective?

Accelerating and sustained demand growth for electricity-driven by AI, data center expansion, and electrification of sectors like transportation and heating-positions NextEra to grow volumes and capture higher average revenue per MWh as utilities compete to provide essential infrastructure for hyperscalers and traditional customers. This is expected to support robust revenue growth.
Declining costs and rapid deployment timelines of renewables (solar, wind, and especially battery storage), along with NextEra's unrivaled supply chain and perpetual construction capabilities, allow the company to extract significant pricing and operational advantages over competitors, helping to expand margins and accelerate earnings as cost pressures mount elsewhere in the sector.
Recently enacted federal legislation (OBBB) and safe harbor provisions provide multi-year tax and regulatory visibility through at least 2029 for wind, solar, and storage projects, which, combined with a large existing project backlog and strong balance sheet, allow NextEra to secure project returns, support dividend growth, and maintain healthy net margins despite broader policy uncertainty.
NextEra's scale and ongoing capital investment in regulated utility operations (Florida Power & Light)-supported by Florida's constructive regulatory environment-are set to drive a larger, more predictable rate base and consistent earnings streams, with relatively stable and above-average returns on equity adding stability to net income.
Strategic bets in energy storage, grid modernization, and nuclear/SMR development, amid growing national focus on grid reliability and extreme weather resilience, create high-margin growth avenues and help the company offset the eventual phase-out of renewable tax credits-supporting the sustainability of long-term earnings and cash flow growth.

NextEra Energy Earnings and Revenue Growth

NextEra Energy Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming NextEra Energy's revenue will grow by 11.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 22.9% today to 26.3% in 3 years time.
Analysts expect earnings to reach $9.4 billion (and earnings per share of $4.37) by about September 2028, up from $5.9 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.9x on those 2028 earnings, down from 24.4x today. This future PE is greater than the current PE for the US Electric Utilities industry at 19.9x.
Analysts expect the number of shares outstanding to grow by 0.14% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

NextEra Energy Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Phasedown of wind and solar tax credits under the One Big Beautiful Bill Act, combined with policy uncertainty from executive orders and potential future regulatory changes, could reduce the long-term availability of key financial incentives for NextEra's renewables, potentially impacting future project economics, revenue growth, and net margins.
Heightened interest rates and higher project financing costs were noted as increasing; if these persist or worsen, they could squeeze returns on capital-intensive infrastructure, drive up interest expenses (as seen in the recent $0.06 per share hit), and lower net income, especially given sustained high levels of planned capital investment.
Increasing regulatory and permitting challenges at the federal level-such as new Department of Interior review layers and evolving federal permitting priorities-noted in relation to siting renewables and potential exposure on federal lands, may delay or raise costs to bring projects online, slowing revenue realization and constraining growth.
Evidence of only modest EPS growth at regulated utility Florida Power & Light (FPL) despite high capital employed (earnings grew <3.5% while capital employed grew ~8%), suggests that regulated returns are flattening, and further rate case or regulatory setbacks could pressure future earnings stability for this substantial NextEra subsidiary.
The potential for greater competition and decentralized power-such as increased distributed energy resources (e.g., rooftop solar) and smaller developers exiting the market as incentives phase down-could eventually erode NextEra's market share and pricing power, especially into and beyond 2029, with long-term consequences for revenue and margin growth in both regulated and competitive businesses.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $82.294 for NextEra Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $103.0, and the most bearish reporting a price target of just $52.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $35.9 billion, earnings will come to $9.4 billion, and it would be trading on a PE ratio of 21.9x, assuming you use a discount rate of 6.8%.
Given the current share price of $70.07, the analyst price target of $82.29 is 14.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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